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10.02.2016 19:20

American focus: The US dollar was trading mixed against major currencies

The dollar rose sharply against the euro, reaching a maximum at the same time yesterday, but then lost most of the positions. The reason for such dynamics were the statements of the Fed's Yellen. The head of the Central Bank reiterated that the pace of rate hikes will be gradual and that financial conditions in recent years are less supportive of economic growth. She also added that the low growth rate of average inflation associated with the fall in oil prices and other imported goods. In general, the Committee expects that inflation will remain low in the near future. According to representatives of the FOMC, forecasts the overall dynamics of interest rates on federal funds over the next 3 years has shifted to lower values: on average, it is expected that the rate will be 1.4% at the end of 2016, 2.4% at the end of 2017, and 3 3% at the end of 2018. "The economic conditions would justify a gradual increase in rates if economic growth is weaker than expected, then the need to increase slower rate." - Said Yellen. At the same time, the head of the Fed stressed that the regulator monetary policy stance in any case is not hard-coded in advance. "All things being equal, the lower the contribution of external factors to the growth of the US economy, will likely contribute to a gradual normalization of monetary policy," - she said. Yellen also indicated that the US strong dollar will increase exports of developed countries, which in turn can allow the Central Bank in Europe and Japan to hold at least a soft start to tighten policy, or it used to be.

The British pound fell against the dollar, returning to the level of opening of the session. In the course of trading influenced by the statements of the Fed's Yellen and weak data from NIESR. As it became known, the growth of Britain's economy slowed in the three months to January, which was due to weakness in the industrial sector. According to NIESR estimated that Britain's GDP grew by 0.4 percent over the three-month period (January) compared with an increase of 0.5 percent over the last three months of 2015. "Slower growth in the three months to January was mainly due to the weakness in the manufacturing sector at the end of last year", - the expert said NIESR James Warren. - Despite our assessment of a weak start in 2016, we still expect the economy to grow by 2.3 percent this year, mainly due to consumer spending. Nevertheless, the negative contribution from net trade is expected to be significant. "Recall the official data on industrial production, published earlier today pointed to a sharp decline in December, which proved to be the highest in more than three years. Industrial production fell 1.1 per cent, which was faster than the 0.8 percent decline in November. Economists had forecast that output will fall by 0.1 percent in December. It was the second consecutive decline in production. Manufacturing production decreased by 0.2 percent , confounding expectations for a rise of 0.1 percent. In November, production fell by 0.3 percent.

The Japanese yen has strengthened considerably against the US dollar, updating the maximum of 10 November 2014. Experts point out that the sharp fluctuations of oil prices forced investors to invest in safe-haven assets, namely the yen and gold. Also, demand for yen is probably due to the surplus of the current account balance of payments, and the deep liquidity of Japan's financial system. Today, Japanese Prime Minister Abe expressed his faith in the ability of the Bank of Japan head Kuroda properly conduct monetary policy. Abe said he would closely monitor the situation on the stock markets of Japan. He also added that the Japanese economy is on track and that many economists explain the fall in the stock market more external than internal factors.

Also on the dynamics of trade affected comments Fed Chairman Janet Yellen. She did not deny the possibility of new increases in the key rate, but noted that financial conditions have become more complex. In addition, she said, the hike may be delayed due to the strong dollar.

Market Focus

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